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tv   Worldwide Exchange  CNBC  August 29, 2013 4:00am-6:01am EDT

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you're watching "worldwide exchange." i'm ross westgate. your headlines today from around the globe, shares of vodafone surging up more than 8%. the company confirms it is in talks with verizon to possibly sell its stake in verizon wireless. uk lawmakers prepare to debate a motion on syria that demands further evidence from the u.n. before a decision on military intervention is made. brent eases by more than 1% as investors price in a delay of any u.s. led strike. indonesian central bankers hike their overneat benchmark interest rates 50 basis points to shore up investor confidence and curb their currency slide.
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carrefour at the top of the cac quarante as they reap the benefits of its turn around plan. sales across europe sluggish despite the better performance in france. all right. warm welcome to you. watching german -- german unemployment data is what we have got out. engineering orders have fallen 3% in july. and the central bank's forward guidance assures markets of low interest rates for the foreseeable future. what we're looking for is the unemployment jobless number. the jobless total down, sorry, up 7,000 versus reuters forecast for it to contract minus 5,000. the adjusted jobless rate, 6.8%,
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unchanged from july. plenty to get through today on the program. we'll continue our focus in germany. we head out to a siemens turbine plant to find out more about a job program that helps power the economy. annette is there. rather apropos. we'll speak to an asset manager who says the cac has two advantages compared to germany's dax when it comes to performance. one is the type of government they have in power. plus, we continue exploring frontier markets with a guest who says saudi arabia is his clear favorite. we'll find out why at 10:50. and 11:35 cet, speaking exclusively cs everest. find out how the biggest steelmaker plans to cope with lower steel prices after posting a first half loss. plus, hard to forget today we have the revision of u.s. gdp. we'll ask a guest if the revised number of 2.2% is good enough
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for the fed to feel more confident about the recovery. more importantly to start tapering in september. all that and plenty more. but first up, vodafone confirmed reports it is in talks with verizon over the possible sale of its 45% stake of verizon wireless. that sent shares sharply higher, nearly up 10%. this comes after the wall street journal says a deal could cost verizon more than $100 billion. er is rison is reportedly in discussion with banks for tens of billions of dollars in financing. it is unclear whether the companies have resolved, though, their dispute over prices and whether verizon put forward a specific offer. it seems a very long time we have been discussing verizon and vodafone. back to chris jen. >> spot on, right? >> we used to ask him, was he going to guy ogo
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ing to buy out the rest of verizon. >> when we were young men, about 13 years ago, about 22 then, ish, chris jen was the ceo of vodafone. he was called the deal master extraordinaire. he bought management for over $200 billion. he bought air touch for around $60 billion. he merged the bell atlantic assets with that operation he bought in the u.s., air touch, to create this titan. bell atlantic was merging with gte. so in the end, the net net was verizon communications was created and verizon wireless was created and vodafone got 45%, communications got 50% of vodafone and thereafter we have been stuck, absolutely stuck. >> then vodafone, the aim was to be number one in every market it was supposed to be in. >> and this ties in with the story that stephane will talk about today, they never got
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majority stake, they sold to vivendi and today sfr is in trouble. what happens now? exciting. before today, vodafone was voted 142 billion u.s. dollars by the market. >> their dividend from verizon every year is worth -- >> a vast amount of money to the company. if they sell this, it is like selling off the family seal. but what it means is the shareholders in vodafone who get a really fat yield of 5.5% could get more returns. herein lies the problem. the deal won't be all cash. it could be half cash and half shares, shares of communication. so do the vodafone shareholders get a fat dividend from verizon wireless from having the chunky 45% stake. do they want only a smaller minority stake in verizon communications with less control over the destiny of the company. that's a big decision for the guys. >> yeah, the other issue is it is a one-team deal. one-time return of cash.
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what is vodafone after that? doesn't have that regular income. it is like what does the company become? what is the investment after that? >> really low growth. we talked about when the telecom companies become utilities, this is a defining moment for vodafone. i've been told i've been on set six minutes longer than i'm supposed to. >> you're working double time now. >> double double time. >> double bubble and the rates go exponentially upwards. good to see you. you're welcome anytime, by the way, on the show. don't feel like, you know, 8:57 you have to quit, all right? >> 13 years next time. >> come back earlier than 13 years would be good. thank you very much. let's move on. activists in syria told nbc the assad regime is shelling an area where the u.n. team is investigating the use of chemical weapons. this as an imminent strike on seer why syria appears to have been set.
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william hague said mps will vote on a watered down motion that deplores the use of chemical weapons by the assad regime but stops short of military action. a second vote will not take place until next week. speaking earlier this morning, the deputy prime minister said there was a great deal of unease about taking military action, stressing the government was seeking to make the case of a limited response. at the same time, president obama set out the case for military intervention saying the u.s. is certain the syrian government has used chemical weapons against its people and there must be international consequences. speaking to pbs news hour, he walked a cautious line saying the white house had not made a final decision on its response and stressed he wanted to send a warning shot to president bashar al assad rather than get drawn into a long conflict. >> we're saying in a clear and
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decisive, but very limited way, we send a shot across the bow saying stop doing this, that can have a positive impact on our national security over the long-term. >> right. our own hadly gamble is outside parliament in london. the original vote is being postponed and greatly watered down today. which means british military action is in the going to happen imminently. there is still the prospect of u.s. action happening. how is this being perceived right now within the middle east? >> well, first, within the middle east there is a great deal uncertainty, we saw in the markets over the last few days and the gulf states. i want to talk about the imminent threat of a strike. 24 hours ago, military strike looked imminent and this debate in the house of commons looked like a foregone conclusion. now the prime minister facing questions within his own party, even over the legitimacy of taking military action in syria and this will come down to whether u.n. weapons inspectors
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come back with closure and concise evident that he used chemical weapons on his people in syria. this could be a good thing for the u.s. and the uk. it could give him time to reach a broader coalition, consensus on what to do in syria. in france next week there is an emergency debate on what to do in syria. the u.n. security council if the evidence comes back that chemical weapons were used, that means you could actually end up seeing a u.n. resolution. mr. putin said if clear evidence of chemical weapons having been used is found, then russia could see -- could support international action on syria. you also have, of course, next week, president putin, president obama, world leaders gathering at the g-20. this could be a good thing for building a broader coalition. >> all right, hadly, thanks for that. the latest outside the house of parliament. joining me, there is a delay in british parliament. are you happy about that, that we try to build a broader
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consensus? >> yes, i think it would be a great mistake to have rushed in without first of all knowing has gas definitely been used, and secondly, who has used it? i think there are procedures in the united nations to stop this type of intervention without authority, without legality. and we have to abide by these. it is very tempting to just go in and do what you think is right. but if everybody in the world starts doing that, it soon is chaos. the security council and the provisions of the u.n. charter are important. i think there is a possibility that if we know who has done it and we think that military action will help it, we could get support and it could even be legal. but it is a very tenuous ground and we need to proceed carefully. >> why have the u.s. and british governments been therefore bearing on what you just said, why the u.s. government appears to want to take military action earlier before we had
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necessarily reports from the u.n. inspectors? >> well, i think president obama is, by nature, cautious. i welcome that. he has seen presumably the evidence that has been produced by the cia and others. we need to see that too. it has to be a transparent process. remember, the world watched a person who they respected, the then secretary of state colin powell, come before the security council, give unequivocal evidence there was weapons of mass destruction in iraq, people promised and swore to us, blair told me to my face there were weapons of mass instructidestru we discovered there was none. there is a healthy skepticism in the world there is also coming out on the fifth and sixth, a summit in petersburg with russia and 20 other countries. i believe the fundamental thing is to get into a negotiation to stop this civil war. does this action help that? very arguably yes.
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>> the russian position here is obviously very important. i can't believe russia is going to support a strike. so if -- if -- can you go ahead with a strike if it is proven, yes, there is chemicals were used by the assad regime and get broad international support without russia, does it damage a future peace process if it is limited and targeted? >> i think it probably would. i think at this stage getting russia to understand at least better what is done, i mean, russia thinks assad did not do this. they think that al qaeda forces in the rebel army did it. now, i think it is very unlikely they have that capacity and that capability. but we know in civil wars that this has been done in the past. we have to be careful of not being had. people are just worried this may not be assad. and if it is assad, what is the
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most important thing to get? that is russian and chinese cooperation in the security council to drive forward for peace. this is a 2 1/2 year civil war that has been going on with disastrous consequences and it is getting worse. >> well done. we'll see what happens for now. thank you very much for joining us. ban ki-moon is receiving an award for services s at vienna vienna city hall. he's expected to speak to journalists after the speech. to comment on syria. we'll listen for anything we get. all right. let's just remind you where we stand now. we're over, what, an hour and 30 minutes into the trading day. and following yesterday's ftse, right now you see we have a bounce up around two-thirds. vodafone helping out the ftse
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this morning. and yesterday with one sector that was stronger, airlines took a whack as we saw oil prices rising. xetra dax, up half a percent. ftse mib up two-thirds as well. bull markets, look at treasury yields, higher as you might see this time yesterday, 2.74%, 2.78%. big focus, the revision for gdp. most people look at it for a steer. is the fed going to finally taper in september? kind of a relief if they did. gilts higher as well, 2.8%. carney yesterday perceived as neutral compared to where expectations before his speech in nottingham. as far as currency markets are concerned, let's show you where we stand with that. dollar yen above 98. aussie dollar, 89. euro dollar weaker. kind of where we were before the carney speech, but generally this bout of risk aversion we have has seen the traditional responses, dollar generally stronger. dollar yen fairly steady, pwe
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have traded pretty neutral on that. we have the commodities board which we wanted to show you briefly. here we go. thank you very much. nymex a little lower. up 110, back to 108.98 on the prospect of reduced action and brent at 115.34. that's where we stand here in europe. sixuan has the latest for us on what is happening in asia today. sixuan. >> thank you, ross. a largely positive session in asia today. the nikkei 225 added almost 1% with exporters gaining on a weaker yen. china markets pulled back a bit ahead of key earnings. also, we're keeping an eye on emerging markets. thailand, indonesia and the philippines slumped about 10% or more this month so far, heading for the worst monthly losses since the 2008 global financial crisis. the philippines market actually rebounding 3.6% today after gdp matching expectations.
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bank indonesia finished its emergency meeting, 50% basis point rate hike as expected. but the jakarta composite coming off its session highs of nearly 2%, now gaining .8%. as for some individual movers, tensions around syria still driving oil related sectors. oil companies chalked up a nice gain with japan's showa shell finishing higher. the higher cost of oil took a heavy toll on power companies. kansai electric power tan over 5% and tepco down 2.6%. but foreign buying lifted the korean market after two days of losses while some analysts say south korea is well differentiated from other emerging markets to attract foreign capital. samsung electronics jumped 2.7% today. financial stocks also rallied. hana financials and woon financials gained.
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there is a reprieve for the indian rupee. it is gain something strength, gone below 68 to the u.s. dollar after hitting that record low against the dollar and the british pound as well yesterday. india central bank tried a series of special measures to try to stem its slide, the latest move to sell dollars to stage oil companies and that pulled more than $400 million daily from spot markets. new delhi is trying to curb gold and silver imports and allow corporate subsidiaries overseas to borrow more from their indian parents. indonesian central bank followed brazil's lead by hiking its benchmark interest rate 50 basis points putting their key rate up to 7%. policymakers also raised their le lending facility rate. decisions were made at an emergency policy meeting aimed at supporting the sliding rupee and fighting off persistently
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high inflation. europe's industrial powers germany believes it has some key lessons for tackling youth unemployment. we'll be at a seiemens plant outside berlin. more with that story. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it.
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bank of earnings out of france today. carrefour has undergone a change of strategy in months. results today revealed improves in margin and increase in market share. you see the stock up nearly 5%. vivendi, that stock is up 1%. second quarter sales fell half a percent. the company's sfr telecom unit dragging on performance. the wine and spiritmaker pernod ricard had a 6% operating growth. and we'll have an interview with the cfo of pernod ricard, gilles bogaert. and l'oreal reports its first half earnings after the close today here in europe. stock just down slightly.
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and tomorrow you'll hear stephane's exclusive interview with the ceo of l'oreal, jean paul agon tomorrow at 7:30 cet. don't forget as well, yeah, there we go. right. let's get more on all of those earnings. stephane joins us. stephane, let's kick off with carrefour. been doing very well. where was the surprise here? >> in france, ross, because the company has been trying for years to rogaine market shares in france. and they finally made it. carrefour posted a 75% increase of its operating income on the french market. and that is really important because it makes 40% of its total business out of france. it is the main market. and that is 75% increase in operating income, upset the weak performance in europe and mostly in spain and italy. and also a bit of asia where the profit declined by 13%.
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now, in terms of outlook, it will meet the market consensus this year in terms of gross operating profit at 2.2 billion euros provided that there is no big swing in latin american currencies. it is what the cfo jean pierre said this morning. carrefour, the problem for vivendi is the telecom unit sfr which posted for the second quarter 11.3% decline in sales. this is due, of course, to the very strong competition. the price war between telecom operators in france. it is not specific to vivendi. yesterday lowering their guidance in terms of revenue for the full year. apart from the telecom business, they reported a 20% decline of gross operating profit for the second quarter. the problem for vivendi also remains the lack of visibility in terms of strategy on the long-term. we don't know yet what the
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company wants to do with the telecom business. last but not least, pernod ricard, growth, you mentioned it for the profit from recovering operations on the full year. sales were up 4% this year for pernod ricard. the company believes growth will continue in the new fiscal year, despite the weaker performance in china. it was able -- it would be able to spend as much as 1 billion euros to make acquisitions. i will discuss that with the cfo of the company later today. over to you. >> thanks for that, stephane. let's get more. yannic joins us. numbers that are better than we expected. you made the point, not because necessarily they're doing great, just expectations are really poor. >> exactly. look at today, carrefour is almost up 5%. look at the number, carrefour is
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going through a three-year restructuring plan there have been selling assets all over the world. all and all, france is doing much better because of back to basic, cutting costs and therefore -- it is still number two in the world in terms of retail, but not national champion as it could be. when expectation are low, it is much easier to beat. >> you still made the point that ten shares have reached their all time high this year, despite what you're saying. and two of them, lo'oreal and pernod have done it this month. why the -- why the big disconnect? >> within the cac 40 there is the ten company which are strongly performing. obviously there is company trading much bigger multiple and
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therefore for them to overperform is a bit more difficult. to do that, you need to have 37 plus pressure margin to grow by 13%. it is much more difficult compared to vivendi, which -- >> out of those stocks, we'll hear from l'oreal, what would be your, you know, your choice at the moment? those are global companies. do you stay at this point in the cycle, do you stay with the global guys or look for those who have underperformed? >> given the geopolitical environment, i would tend to look at more oil industry and within the oil industry, the subsidiaries and engineering business. but, you know, when you see that vivendi, for example, is showing -- the result is not very great. sfr suffering, selling all their best asset for quite -- the
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press was not very good. there is a strategical problem, we don't know if they split media and telecom, what they will do to develop the business again. and all and all, the stock is up because -- >> just finally, got general elections, big divergence between german and french politics. what is the relative value between -- is there a play looking at the dax and the cac quarante? >> it is worse looking at it. the german economy is -- when gdp is up, france is up on 7% in germany. the industrial product is fast. every data is strong in germany. >> look at the chart in lockstep over the last 12 months. >> yes, the next 12 months, cac perform a bit. look to a longer chart, we see since '88, each time the
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socialist has been -- >> government. >> the government, the parliament majority, you saw the cac 40 underperforming the dax. it is completely -- sounds very surprising, but the all about expectations. >> yeah, yeah. we had a similar thing here '70s and '80s, ftse outperformed the labor government. >> i think the expectation of the market is very quick. and second of all, company has been -- in uk and france now, very good to deal with difficult local government. they are international. and, you know, sometime you can explore the discount because of the policy and the political leaders. >> good to see you. thank you very much. portfolio manager at glen devon king. we had icbc numbers out. better than the forecast 67.1 billion. that interest margin 2.578%. the nonperforming loan ratio, .87%.
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we'll take a break. more on that when we come back. "worldwide exchange" continues in a few moments.
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these are the headlines from around the globe. shares of vodafone surging up nearly 10% as the company confirms it is in talks with verizon to possibly sell its
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stake in verizon wireless. british lawmakers prepare to debate a motion on syria that demands further evidence from the u.n. before a decision on military intervention. indonesian central bank hiked their overnight benchmark interest rates 50 basis points trying to shore up investor confidence and curb the currency slide. and carrefour races to the top of the french stock market as they reap the benefits of its turn around plan in france with sales across europe still pretty sluggish. and the u.n. chief ban ki-moon said chemical weapons -- sorry, chemical inspection teams in syria will leave by saturday morning. this is as british lawmakers have requested more time to make a final decision on intervention until those inspections have been completed. the same time, activists have told nbc that the assad regime is shelling an area where the
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u.n. team is trying to investigate the use of those chemical weapons. middle east markets have rebounded this morning as fears eased over imminent attack. this follows a sharp sell-off on wednesday. yousef is in dubai, looking at market reaction and investor nerves. how would you describe it? >> well, ross, good to see you again. as you mentioned, some of the markets clawing back some early losses in the trading week. now, keep in mind that the sharp losses come after quite the rally. if you look at one-year returns, year to date returns for dubai financial market, that's in excess of 60%, one of the best performing indices in the world and analysts were scratching their head they couldn't explain it. the service sector is doing well and all the other drivers like tourism and logistics are holding up well. so the sell-off had a chance for investors to lock in some gains.
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that's why we're seeing a bit of a rebound this morning on some of the selected stocks. also, the very fact that you have turmoil in syria, in egypt and libya and iraq, a lot of capital flows going to dubai, the perceived safe haven of the region. we had earnings out from dp world reporting an increase of 9.1% on net profit, beating some expectations. the stock trading relatively unchanged at this point. dp world, the third largest port operator in the world and always an important indicator about global trading affairs and sort of the standard if you will. finally, a quick note on the istanbul stock exchange. also, we are keeping a close eye on the currency pairs with the turkish leader, that is under pressure with what is happening in syria and emerging market pressure in general. but we're also keeping an eye out on the exchange, which is rebounding quite a bit in early hours of this morning. also, the investors appear to be taking news in stride on the
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widening turkish current account deficit, which increases from $9.8 billion in july. that's passing expectations. reuters poll suggested from $8.2 billion, and that shows you that might add some pressure as we go through the trading day. ross? >> and ahead of the that, we heard the jobless number for august has risen. expectations for a fall of around 5,000. the current total number of jobless in germany sits at just under 3 million. annette has been looking at how germany deals with its unemployment numbers and gets younger people into trading. they're doing it rather more successfully than others around the globe. annette, where are you? you're at a siemens plant, right? what is the program that they run? >> well, actually, it is a -- germany wide program. siemens is an example, but a big
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example because siemens is an industrial giant. what they're doing, it is called dual educational system, meaning that, of course, those young people are going as well into class, but at the same time, well not at the same time, but parallel to learn iing, they ge training, hands on training. that is what you're seeing here behind me. people trying to build specific mechanical stuff and as well trying to mock certain labor process. and after three years, they're really well trained and know how to not only run through the stuff on a theoretical basis, but really have hands on experience. in later stages, there are as well actually working in factories of siemens and helping those -- the experienced masters here to build things like the biggest wind turbine -- the
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biggest gas turbine, i should say, in the world. i had a look at it yesterday, really impressive. earlier i caught up with the head of their training system here in berlin. and i asked him why they're now taking us europeans to that program and how that is working. take a listen. >> on the one hand side we would like to give a sign, also to other companies that we give young people from different countries in europe a chance for high quality education. and the second part, they will go back to their home countries after that and they get a good job at siemens and they have two languages, german and their home language and it is a big, yeah, advantage for the company also. >> so the system that more than 65% of graduates from school will actually go into such a training is the reason why germany has one of the lowest youth unemployment figures among
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industrial countries. and, of course, the germany faces a different problem. the problem is the scarcity of skilled labor. and that is one reason as well why companies and the government is discussing to implement schemes to get people from southern europe or elsewhere who is willing to come to germany, into these kind of training ships that they're learning the job on the job as we say here, and to close that gap of the skilled labor workforce we're having here as a problem in germany. so everybody who would love to come to germany probably should apply. ross? >> all right. okay. i want to come -- i want to come and see that big gas turbine. sounds -- >> you can see it. we have the footage. >> good. we'll run it. maybe i'll go online. thanks, annette. it is not the same -- you need to be there in person to get the scale. that's the point.
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>> yeah. yeah. that's very much the point. >> good. annette, thanks for that. catch you a little bit later. don't forget, any thoughts or comments, e-mail us, european equities meanwhile are rebounding after a week of losses mainly so far. the ftse 100 up two-thirds. cac quarante up a half. ftse mib, firmer yesterday just about. individual companies, wpp stock up 4%. the group reporting a 2.4% rise in light for light revenue first half. pretax profit for the period hit 427 million pounds with stronger growth in the u.s. and uk helping to counter a slowdown in asian and african markets. advertising giant said it expects a stronger second half and slightly raised its forecast for full year revenue growth to over 3%. in a first on cnbc interview, the group responded to fears over a slowdown in emerging markets.
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>> asia, latin america, africa and the middle east continue to be much better than mature markets. but not as strong as they were before. what we see on the functional side is media investment management, media planning and buying growing strongly. >> now, chinese banks, the world's most profitable bank, icbc added to its bottom line with a 12% rise in first half profit on the year. it beat second quarter forecasts earning nearly 70 billion yuan. yesterday, number three lender ag bank rode higher fees to a 2% gain in profits but they're warning of challenges ahead, including a rise in bad loans and narrower interest margins. earlier results from china construction bank, bank of communications reflected a slowdown in profit growth. chairman for sterling finance hong kong and joins us now, stuart, good evening to you.
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thank you for joining us. these are banks that are beating the forecast numbers, but will investors focus less on that and more on the problems that they have highlighted? >> it is always nice to see the results coming through a bit stronger than analyst expectations and i think we should be comfortable with that. now, of course, when we look ahead, there are a number of challenges, not least because the economy has slowed down, slowed down. that is somewhere between 7% and 8% and there are a number of issues to do with credit, to do with the shadow banking system in china, to do with what is actually happening, some liquidity squeezes in june. so there is an array of concerns out there, but in the meantime, i think we should be happy for the first year, first half year results. >> yeah, happy about that. but we're discounting -- if you're a stock market invest, you got to discount the future a little bit.
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so are these big banks going to get around the fact -- the funding cost of rising, loan margins are this riching a shri this going to weigh on them in the second half? will they come through that challenge? >> i believe that they will come through the challenge, not too badly. we had some very negative reports on china as an economy, and people coming up with fairly extreme views that the economy as a banking system is at the point of collapse. i just don't believe that, i don't see that. i undoubtedly there are challenges, but when we think about china and this is going to continue to grow for an awfully long time, if you look at the big four, big five banks in china, they're essentially all domestic banks and the whole world to take on as they rise. and inside china, the banks are going to get into all sorts of other things. things like credit cards, thing like wealth management, other
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facilities are very underdeveloped in china. and these big chinese banks are very, very well placed to increase their involvement in the overall economy. so i think taking the 1, 2, 3-year view, very positive on the chinese banks. >> we have insurance companies posting earnings this week. is that an industry that can recover? >> yes. the insurance companies had a pretty tough time in the last year or two, partly because of lower interest rates, partly because of some difficulties over the market, particularly concerning bank assurance. but what we're seeing now is a relatively mixed bag of result s. but circ, the regulator for the insurance industry in china, has come forward with a number of steps, in particular, to liberalize the rate of interest that the insurance companies can price into their products. this should certainly make life insurance policies somewhat more
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competitive than bank deposits. hopefully it won't lead to irresponsible pricing on the part of some smaller companies. but obviously this is good news when the insurance companies are a bit more flexibility with pricing, also circ has come out with certain measures concerning the investment of insurance funds, we should give more flexibility and more earning potential going forward. >> stuart, always good to speak to you. have a good evening there in hong kong. >> thank you. while many just google it, the 40 million koreans who surf the internet ask nava. the company's top search engine is targeting the population . >> translator: in korea, it is a formidable market player.
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it is difficult to overtake them. we're making further headway in japan, thailand, taiwan and other southeast asian nations alongside europe and latin america. i believe our service will become a great success story around the world. >> naver is under a lot of flack for its predominant market position. do you see yourself as a local crusader against global giants like google or a local titan trying to flush out competition? >> translator: what we have learned from the wave of recent criticism is perhaps in our efforts to provide the highest level of service, we didn't look after those around us. in korea, some share the view that it can't be all about you when you rise to the top. we need to co-exist with others while we continue to expand overseas and grow into a global success story. >> you've recently launched a $90 million fund to help local startups. do you think there is real
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potential for growth in korea so that maybe at some point it could rival what you see in silicon valley? >> translator: first, korea has super fast mobile internet speeds. second, the country has outstanding hand setmakers that make it possible for smartphones to be easily available to the public. third, these two factors probably explain why so many people spend a great deal of time using their mobile devices. they're also picky and have needs. in this kind of environment, companies try hard to cater to varied user demands which naturally results in supreme mobile services. i think some of the best examples are naver's line. there are many first mover advantages that will pave the way for the rise of unrivalled mobile startups. >> what's on the agenda in asia tomorrow, plenty at stake for india, releasing first quarter gdp figures, giving investor concerns over slowing growth. that's going to be key. also, update on whether
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abenomics is continuing to work in japan. july cpi household spending, adjusted output and jobs data all do. few more earnings in hong kong includinge ining ping ann insurd china eastern. the british prime minister david cameron expected to arrive at downing street shortly as the cab minet meets about syria. a debate in parliament has now been watered down. still to come, middle east tension heightnd by the suspected gas attack in syria. does this rule out the region as an investment? we'll look at the continuing investment case for frontier markets right after this. ♪
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declining economies and the lead in for our views this week on frontier markets. jules continues that section of our coverage. julia? >> thanks, ross. middle eastern economies range from the very poor such as gaza and yemen to the extremely wealthy nations including the uae and saudi arabia as well as oil and oil related products, industries of the region include the likes of agriculture, medical supplies and defense equipment. now, in the case of the uae in bahrain, of course, banking also plays a large part. you have to remember unemployment, it is noticeably higher in the middle east with almost a third of young people out of work. just what does the region need as an investment opportunity? foreign director favorites like qatar and united arab emirates. now, in search of resources, china turned to the middle east,
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investing in volatile areas where the west fear to do business. today, part of our focus week on frontier markets, we'll drill down into the good and the bad of putting your cash in the middle east. ross? >> all right, jules, thanks for that. joining us for more, michael harris. thank you for joining us. clearly big force for the gcc equity markets over the course of this week, stabilized today. he made the point it has come on the back of what has been a pretty good year overall after some pretty hefty gains. what happens now for those markets? >> i think it will be a mixed outcome. the uae has been very special, sort of like a turbo charged proxy. we actually downgraded the uae when the announcement came it would enter the eamericmerging indices. >> you sort of buy ahead of the expectation that's going to happen, right? >> exactly. wasn't definitive it would
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happen, but the s&p was really implicitly driving the uae because it is a -- more of a global growth proxy. you need supportive energy prices which we have, but those are much less had heavily owned and those markets, we think, will continue to catch a sustained bid. the uae will look for your point for re-entry. >> let's pick up on saudi. as you say, domestic and just pure energy player, right? i presume. >> a lot of what is listed isn't energy. you can't buy the oil name. economy is -- >> the company, yeah. but does the rest of the market reflect, though, it is an oil company? >> not to the excetent russia does. in saudi, they have such deep pockets, they're willing to halt production in order to stabilize the oil price. you don't worry about the saudi budget falling apart from one year to the next, regardless of
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the oil price. as long as reform momentum is moving in the right direction, as long as the underlying drivers, for instance, look at saudi banks now, they -- these are all u.s. dollar linked economies. and so they're funding themselves very cheaply to begin with, a lot of current deposits. with rates being low, it hurt the saudi banks. these are direct plays on u.s. treasuries rising, much more so than saudi than the uae. >> as the dollar strengthens -- >> it doesn't. you look at most emerging markets, the dollar link currencies are immune from that. egypt wasn't, but because of the international support it is time for the time being. within the region you say turkey is the one that ends up being the -- >> that's an interesting thought because how do you combat rising treasury yields. you're making the case, saudi
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bank is one way to benefit from that. >> absolutely, yes. >> i like that. >> hopefully it will prove right. >> we'll see if it works out. meanwhile, what about what is going on with egypt? is anybody putting money into egypt at the moment? or just too much risk? >> without a doubt people are putting money in. we put a note out on the back of the coup where it said bank on international support because you knew a lot of money was coming. you can't do something like this without global attempt for this to succeed. and, you know, clearly you had a lot of gulf money coming to support egypt. pray for stability was our title. we think the risks with egypt have actually risen because of this coup and the reason we say that, we think it is geopolitically premature. previously all we needed was morsi to sign up with the imf. now we need clear signs this country can return to a stable path and that's highly, highly debatable.
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>> yeah. away from saudi arabia, you mentioned qatar. what is your view on qatar? >> same thing dollar linked, gas driven, oil driven. it doesn't have the demographic drivers of an emerging market. qatar is a smaller market from a population perspective, very rich. one thing you know, they are going to build. you got the world cup, they're putting a lot of infrastructure in. whether it ends up working, dubai did the same thing taken ended up a regional hub. might have done a lot of stuff that was successive. whether they'll succeed is debatable, but we have basically an eight year window before we need to make judgment. >> whether they manage to keep the world cup in the summer is also highly debatable. i wouldn't fancy is. despite air conditioned stadiums. thank you for that. michael harris joining us from bank of america merrill lynch. we're monitoring number ten
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members of the british cabinet are arriving at downing street. a cabinet meeting fairly shortly ahead of a parliamentary debate that has been watered down about potential military response against syria. and we'll take a short break as well. still to come, commodity prices starting it ease after fears of that imminent military action in syria push the sector higher. will the relief stay or not? the second hour of "worldwide exchange" will kick off with that right after this.
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you're watching "worldwide exchange." i'm ross westgate. if you just joined us, shares of vodafone surging. up 10% as the company confirms they're in talks wither have verizon that they're possibly going to sell its stake in verizon wireless. indonesian central bank hiked their overnight benchmark rates 50 basis points trying to shore up investor confidence and curb the currency slide. carrefour at the top of the
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french stock market, the retailer reaping the benefits of its turn around plan in france, despite the fact that sales across europe are still pretty sluggish. big corporate news this morning. vodafone confirmed reports it is in talks with verizon over the possible sale of its stake in verizon wireless. sent shares up 9.25% at the moment. er have ri wall street journal said a deal could cost verizon more than $100 billion. they are reporting discussions with banks for tens of billions of dollars in financing and it is unclear whether the companies have yet resolved their dispute over rather important issue of price. or whether verizon put forward a specific offer. in april, reports suggested they had hired advisers about a possible $100 billion bid, split
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50/50 between cash and stock. helia is with us on set following this story as well. vodafone, verizon. >> i know on again, off again, on again, off again. >> it would be nice if we got some resolution. >> it looks like there might be an announcement on a deal, hence i say before next week, which is quite exciting. remember, back in may we were nearly -- verizon had gone to the banks, looking for quite a big debt package, they have gone to five or six banks asking them for $10 billion a piece. that had already happened back in may. and then talks got to a stalemate point on price. i spoke to a couple of vodafone shareholders before coming on and they said, well, fantastic. we like the boost to the share price, but it all depends on price, number one, because they
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didn't think the $100 billion was fair, and tax. the issue on this deal is tax. the tax bill for vodafone is high on this. it is about how are they going to structure the deal. and word is that they might buy the verizon kind of wireless holding company, vodafone american holdings, which could really massively reduce that tax bill, saving about $35 billion for vodafone. that would be a big deal. so shareholders are looking for what is the structure here, beyond just the cash and share split, how will they get away with paying less tax. >> and how do they get away with putting it back into sharehol r shareholders' hands, right? look, you get a nice dividend, or the buyback stock and do something with the cash and vodafone loses the income it derived. big chunk. >> massive. >> it makes up a huge chunk of the vodafone dividend, right?
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>> a cash cow. >> when you get rid of it, you're left with -- what do you have left? >> they did the cable deutschland deal. so they're looking in europe at extending their products and really expanding that. but, you're right, huge cash cow verizon wireless has been, but for the right price, i think shareholders are keen. >> yes. the right price. >> the right price is the key word. we still don't know what the right price is, one hopes we're getting there. helia, for now, thank you very much. so vodafone is currently at the top of the uk market. let's show you where we stand with u.s. equities right now as well. the dow is up 48 points yesterday, s&p up 4.5. you can see we are higher this morning, currently around 38 points above fair value for the dow jones industrial average. the nasdaq is around 9 points
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above fair value and the s&p is 4 points above fair value. european equities, ftse boosted by vodafone up two-thirds of 1%. cac quarante is up a third. and the ftse mib doing pretty well, up 9. %. did close in positive territory in europe. on bond markets, treasury yields higher than this time yesterday, yielding 2.78% on the ten-year. 2.74% there, but thereabouts this time yesterday. not a huge impact for mr. carney's first official speech yesterday afternoon. on the currency markets, this is where we stand. dollar yen just above 98, little firmer. euro dollar slightly weaker. cable where we were before mr. carney started speaking at 1:55. that's where we stand in european trade. sixuan has the wrap for us. >> we see consolidation in asia today after yesterday's
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sell-off. weaker yen helped the nikkei gain nearly 1%. china markets eased a little ahead of the key earnings. we also keep watching emerging markets, thailand, the philippines and indonesia have slumped about 10% this month, heading to their worst monthly losses since 2008. the philippines market rebounded 3.6% after gdp matched expectations. bank indonesia also hiked benchmark rates by 50 basis points as expected. the jakarta composite gained almost 2% today. meanwhile, india at 1.5%. as for big movers, tensions around syria still driving oil related sectors. japanese oil company showa shell gained 3.5% today. but the higher cost of oil hurt power companies. kansai electric power tanked over 5%. and tepco down 2.6%. but the south korean markets snapped a two-day losing streak.
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some analysts say south korea is much better positioned than other emerging markets in terms of attracting foreign cal tap. samsung electronics jumped 2.7% today. financial stocks such as hana financials and woori finance also gained about 3% today. back to you, ross. >> all right, thanks for that, sixuan. have a good evening in singapore. we had a preprieve for the indin rupee. it has gone back below 68, 67.84, pretty small reprieve after the central bank in india tried a series of special measures. the latest move to sell dollars directly to state oil companies, that poured more than $400 million a day from spot markets. new delhi trying to curb gold and silver imports and allow corporate subsidiaries overseas to borrow more from their indian parents. indonesia trying to do its best. the central bank is following brazil's lead by hiking
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benchmark interest rates by 50 basis points. they raised their lending facility rate 25 basis points. the decision were made at an emergency policy meeting, which is also aimed at supporting the sliding currency and fighting off persistently high inflation. bank indonesia expects inflation to be as high as 9.8% by the year end. the rupiah flat on the session. we continue to focus on the events in the middle east. u.n. chief ban ki-moon has said chemical inspections teams in syria will leave by saturday morning. those comment comes as activists told nbc that the assad regime is shelling an area where that u.n. team is currently investigating. sources also told nbc that inspectors left the hotel in damascus to continue work this morning. this strike appears to have been set back after they agree to hold a second vet on retaliation once the teams completed their inspections.
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parliament in london will still vet on a watered down motion later today that deplores the use of chemical weapons by the assad regime, but stops short of recommending military action. nbc says the second vote will probably not take place until next week. the prime minister is also holding a cabinet meeting to discuss the various military options today. hadly gamble is outside parliament in london. and joins us for more. hadly, a watered down vote today in parliament. what is happening next? >> basically what is very, very important to the lawmakers here who forced this watered down version of the vote today and the second vote next week, what is very important to them is they find out from the u.n. weapons inspectors if assad used chemical weapons in syria against his own people. those chemical weapons inspectors coming back on saturday. at that point, we should know more. this delay actually works in favor of the u.s. and the uk in the sense that it gives them time to create a broader coalition, a broader consensus on what to do in syria.
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on wednesday, hollande called for an emergency debate. you could see france coming into the fore as one of the allies about what to do about syria and also in terms of a u.n. resolution. president putin said in the past if chemical weapons were used by mr. assad, that would necessitate some international action. so you could end up seeing an actual broad consensus from the u.n. for a resolution on syria as early as next week. you have to remember that president obama, president putin, world leaders are gathering at the g-20 next week, on thursday. you'll see syria as a major part of that debate. >> doesn't stop, though, the u.s. administration from pressing ahead with action, regardless of what the uk parliament does, does it? >> it doesn't, but the u.s. and the obama administration, they generally would like to go in, i think, with a broader consensus from the international community. they would like that broader evidence. there is still that hangover from the iraq, the shadow of the
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iraq war, how things went down there. i think you're seeing a lot of that reflected in the actions of the parliament in terms of this vote today and further debate and vote next week. i think especially when you talk about the obama administration, they have been slightly hesitant in their processes and their policies in the middle east and i think you'll continue to see them checking out the international community, making sure what they're doing has some type of consensus. >> hadly, thanks for that t. we have just got the latest on italian auction. btp auction, five and ten years, sold 3.5 billion, the new december 20,018. the yield, 3.38%. the previous auction was on july and the yield at that was 3.22%. it is a slightly higher yield. perhaps no surprise bearing in mind we had this week, of
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course, the berlusconi party suggesting it may undermine the coalition government if berlusconi is banned from parliament for his tax indiscretions. they also sold 2.5 billion, 2 billion was the maximum. they sold the maximum they were looking for. yields slightly higher. while we focus on syria, also focusing on commodities. brent and nymex lower today. brent, not by much. nymex at 109.27. joining us from copenhagen, ali hanson at saks. thank you for joining us. right now, as far as oil is concerned, what is priced in with regards to syria and what isn't? >> good morning. i think we have quite a lot priced in already. obviously you can look at the
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price and say 115 is not a great price compared to 128 we saw the previous two years so you can really argue the crisis this time is as grave as when we had the libyan war in 2011 and the iranian sanction in '12. this time we're seeing u.s. production continue to rise so the market is slightly better prepared this time, but obviously if the situation escalated, there is a fear we'll see another spike. the market seems to be -- the market has already been buying up the market, there is a very, very big speculation out there, already at these levels. >> yeah. so, if we do get a -- let's say we get some consensus and there is a strike and limited, targeted, and that's it. what happens then? >> well, the problem with syria is they're not really producing oil, but they got two major opec countries on either side of the conflict. and it is obviously if you look
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at major nations, russia and u.s. as well, the other side, it is what is causing all the worries, but if there is a -- if oil is being impaired from coming into the market from opec, the middle east, there will be a short-term spike and you look at, depend, 128 area, which we have seen for the last couple of years. 150 i don't think then really has to require a major move or major blockage of oil. >> yeah. the key point is whether, you know, a targeted strike brings in any of the -- any of the other -- the region into -- which is what they're trying to avoid at the moment. if we get sustained price levels, are we likely to see any reaction from saudi arabia or opec? >> i think if we continue to -- if the situation normalizes a little bit, i think there is a
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risk that this market would sell off by $10 quite easily. we have seen prices rise over the summer. speculative interest is high. we're coming into the time of year where demand is going to slow seasonally anyway. some of the disruptions we have seen elsewhere, libya is the main concern at the moment, but other disruptions should start to ease off a bit. we come into a period where there should be enough oil, so unless we -- so also the market is well aware that higher oil prices for a sustained period is hurting growth and that's not what we needed at the moment. saudi arabia may try to make an impact if prices remain too high for too long. >> very quickly on gold, still above $1400 an ounce. again, is this -- is this like oil, could it also be sold off fairly quickly? >> i think oil is slightly different. we have seentiment change over the last month. the institutional selling that needed to be done based on tapering has been done by now.
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we are starting to see a small pickup in investments. i think we probably talk 1350 to 1480 area for the remainder of the year. so any movement below 1400 at the moment would be a buying opportunity as long as this unrest continues. >> all right, ali, thanks for that. senior commodity strategist at saks. before we take a quick break, what is on the agenda state side today. weekly jobless claims at 8:30 eastern. forecast to drop by 4,000 to a total of 232,000. at 8:30, the first revision to second quarter gdp, the biggie. expect it revise upward. st. louis fed president james bullard and richmond fed president jeffrey lacker speaking today. on the earnings side, campbell soup reporting before the bell. after the close, from, splunk and my favorite, krispy kreme doughnuts. [ male announcer ] i've seen incredible things.
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recap of the headlines. investors cheer confirmation from vodafone it is in talks to sell its stake in verizon wireless. president obama insists syrian government used chemical weapons, but british sentiment turns against the media to military action. and the bank of indonesia
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raises its key lending rate to shore up one of the worst performing currencies in asia. coming up, we'll go to a siemens plan outside berlin. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. [ male announcer ] it's time.
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germany's adjusted jobless number for august rose for around 7,000. expectations were for around 4,000 to 5,000. the current total number of jobless in germany sits just under 3 million. one company found an original way to tackle youth unemployment. annette is counting down to the election. she's in berlin at a siemens plant where they have an extraordinary gas turbine apparently. we're away from that. what are they doing particularly well in germany to deal with youth unemployment? >> well, actually they are very good at training young people and it is called dual education system. which we have in germany actually since the medieval ages which really sounds a bit absurd, but we have a long tradition in craftmanship in germany and that is now really paying off. just remember, some years ago we were planned to be the sixth man
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of europe because we didn't go that much into banking or into services like other countries, but now it really pays off. a lot of companies are really thriving and what we have in that country is rather a lack of skilled labor. and industrial giants like siemens are tackling the issue by educating their own people. what is brand-new in a way, or kind of rediscovered by the politicians as well is to bring people from other nations to germany because our own young generation is not enough to fill the gap of that skilled labor demand, german industrial companies are having. so right now i'm at the siemens education unit in berlin where they're training young people from all over the world. and right next to me stands a young man from belgium, tim, and i would like to ask you, tim, first of all, thank you for
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joining us. why did you come here to germany to be trained after such a long education you already had in belgium. >> i think for me, to for my job later on, because i want to travel and study in a lot of different countries and work in different countries, this is a good start. because it is in germany, you learn a different language and, like, get to know people that you can maybe use later on when working at siemens, that you know a lot of people from different countries because we're here with a lot of people actually. >> was it well a point that the german economy is strong and you would like to work for the german company because the press pictures are better. >> i think even in belgium siemens is known and a big company. i guess a company like siemens is known for giving a lot of opportunities and being able it go wherever you want, be hired by any company and get a goal where you want to go to.
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so this is a good company to start at. >> talking about the dual education system. as you have already been in training for a lot of years in belgium, what makes it different here to have additional training? >> the difference between here and belgium is you have more practice, you get more prepared for the work later on. and also because it is in germany, most people always say that germans are actually more accurate and work is a lot better and you actually see it here in education itself, you learn something very precise and learn to do it faster. so this way the dual system is very good. >> thank you very much, tim so, ross, you see you learn a lot of things a lot better here in germany. of course, that's me being german and being very provided of it. >> yeah, well, thanks to tim, i like hearing what he had to say. i wish him all the best. yes, you do learn lots of things in germany. thanks, annette.
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>> yes. >> right. still to come on the program, we'll turn from germany to the russian steel sector, still singing the post crisis blues, being dragged down by lower prices and piles of debt. is there hope for a rebound? we'll speak in an exclusive interview coming up. building animatronics is all about getting things to work together. the timing, the actions, the reactions. everything has to synch up. my expenses are no different. receipt match from american express synchronizes your business expenses. just shoot your business card receipts and they're automatically matched up with the charges on your online statement. i'm john kaplan and i'm a member of a synchronized world. this is what membership is. this is what membership does.
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you're watching "worldwide exchange." shares of vodafone surging up over 9% as the company confirms it is in talks with verizon to possibly sell its stake in verizon wireless. lawmakers prepare a motion on syria that demands further evidence from the u.n. before a decision is made. investors price in a delay of any u.s. led strike. indonesian central bank hiked their overnight benchmark interest rates 50 basis points to shore up investor confidence and curb the currency slide. upon further review, things may be better than they seem. data out today may show the u.s. economy growing more than we thought during the second quarter.
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and if you're just joining us state side, good morning. u.s. equities after a closed high yesterday are called slightly higher at the moment. the dow finishing up 48 points. currently trading 40 points above fair value. the nasdaq is currently nine points above fair value and the s&p 500 is around 3.5 points above fair value. the ftse cnbc global 300 is up by about a .1%. and european equities are firmer as well. the ftse up three-quarters. half percent gains for the german and french market. ftse mib up nearly a percent as well. vodafone and carrefour among them. ban ki-moon said chemical inspection teams in syria will leave by saturday morning. the comments come as activists told nbc that the assad regime is shelling an area where the
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u.n. team is currently investigating the use of chemical weapons. now this is all as an imminent strike of syria appears to have been set back after british lawmakers agreed to hold a second vote on retaliation once u.n. teams complete those inspections. parliament is going to still vote on a watered down motion later today that will deplore the use of chemical weapons by the assad regime but stop short of accepting the military action. we don't think the second vote will take place until next week. british prime minister david cameron is holding a cabinet meeting to discuss the various military options. at the same time, the u.s. president barack obama set out the case for military intervention saying america is certain that the syrian government has used chemical weapons against its people and there must be international consequences. speaking to pbs news hour, he walked a cautious line saying the white house had not made a final decision on its response and stressed he wants to send a warning shot to president bashar
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al assad, rather than getting drawn into any long conflict. >> we're saying, in a clear and decisive, but very limited way, we send a shot across the bow saying stop doing this. that can have a positive impact on our national security over the long-term. >> joining us for more in the stud yo-io with me, richard ala. we have seen oil prices surging. brent coming back from 116 today. which is the -- i suppose the threat of an imminent strike today or tomorrow. what is the -- syria is not an oil producer. what is the -- what is the threat to oil production? what is the wider conflagration we are worried about? >> syria was only a middle tier oil producer and the market priced that in. but it sits in the heart of a
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reege thgion that is critical. its neighbor iraq sees violence at five years high, directly related to the conflict in syria. and iran is one of the biggest backers of the syrian regime and the barrels of oil that are currently held under sanctions with only come back if iran and the u.s. can -- >> just explain how iraq has been affected by the syrian conflict and why that's damaging iraqi output. >> so as the syrian conflict became ever more sectarian in nature, what happened was the sunni militants in iraq took kind of confidence from the fact the gains were being made by sunni rebel groups in syria, also probably flows of weapons and to some extent men crossing that border. it is allowing the sunni militants to -- in iraq, to increase their levels of violence and attacks against the shia-led government. it is that sectarian tension playing out across the region flaring up in iraq. >> if we do get a -- if we get a
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strike that has some international support, and it is targeted, and one off, it is small, what is the risk of that triggering something else? is it minimized? how minimized -- how can you minimize the risk? >> in my view, that really is difficult. all the language coming out of the white house and from the uk government has been about limitlimit ed surgical strikes, a response only to that chemical attack and not trying to get caught and drawn into the conflict in syria. but it is very, very difficult to do that once you get militarily involved, very hard not to get drawn in again. if there are future chemical attacks or major atrocities with conventional weapons. >> yeah, but you talk about iran, iran is threatened -- one thing they can only do is -- they're not, you know, what is the -- i'm trying to work out
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actually what is the risk of something actually happening to -- how do you measure the risk of something actually happening to disrupt supplys? >> i think the risk of an event that takes millions of barrels of oil off the market is quite low immediately following a syrian military strike on syria. i think what we see instead is another edition to the instability in the region and couple of flashpoints, iraq, iran, and elsewhere being ever more boiled up and ever more uncertain, which the market is trying to price in. that could turn into direct disruptions on supplies. >> presumably, russia reaction will be key. >> yes. >> to diffusing or making it worse. >> and it seems perfect et clear that russia will block any attempt to get u.n. backing for a military strike. and will probably look for other ways to frustrate america's foreign policy goals if they have gone ahead with that strike. >> richard, thanks so much. policy analyst at energy
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aspects. to steel. shares in russia's biggest steelmaker everest are rallying. the group reported a net loss in fist half, hit by lower prices for the industrial metal. the figure widened last year, but key point was it was largely in line with consensus forecasts from reuters. london listed group partly lower and says it will not recommend a dividend. joining us now is the cfo at evraz. thank you for joining us. things have been fairly tough in the steel market. oversupply, cash costs at the mines above prices, how are you dealing with this situation? >> being conservative on the cash side. with the financial side we have done a lot of refinancing over
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the last couple of years. we expended our maturities, making sure we have no immediate liquidity risks, so from financial side, we're okay in managing the situation in the current environment. on the industrial side, as you mentioned, in your introduction, we have reduced capex for this year already, from a 1.3 billion budget to 900 to 1 billion probably for whole year and we're revising our development plans for the future as well as obviously cost cutting and dealing with some higher cost assets. >> what are the development plans? >> development plans, well, we have some projects that produce costs. not get too technical, but, you know, where we can save on natural gas, for example, in the blast furnaces. these are some of the investments that we started already and we're probably going to continue with those and finish those. some we have completed the beginning of the year. the rest we'll deal with in the next 12 months.
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>> these are thing you can do. how difficult is the market going to remain in terms of demand and prices? >> that's in a way anybody's guess. the industry is oversupplied. generally utilization rates, see different figures, but generally accepted utilization rate, 75%. large overcapacity of china, so if some excess capacity comes off, and demand continues to rise, we'll get back to more healthy situations. >> it is not easy. not easy for the industry to reduce excess capacity quickly, is it? >> it isn't. we did a little, for example, in 2009, shoved down a million and a half tons of capacity. you would hope some of the other players in the industry will also do the same. >> what about -- you take that vertical approach that others have, like natal as well, owning
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mines. >> not popular at the moment. >> no. exactly. that's an issue. what can you do with that part of the business? >> i think we're reviewing our higher cost mines. so where we can sort of reduce production in these or shut these down and develop some higher -- some lower costs, lower cost assets. we have a few of those. we launched a lower cost mine at the beginning of the year. and that -- we have to manage the portfolio. >> how long do you think it will be before you start paying one again in. >> i don't want to mick any forecasts. we take dividend decisions as we did with this one yesterday at the board, looking at the results and at the situation. it seemed imprudent at this time to do so. we are looking to divest two assets. if they go through, we may pay a special dividend. >> yeah. you this is the south african
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subsidiary. joint venture. you were talking earlier in the year about that remaining on track. what is the update? >> the discussions continue with the partner. due diligence is on going. we hope to close the deal before the end of the year. >> how will that help? what transformation will that make to your cash debt position? >> we hope for an inflow from obviously the sale and therefore some of that inflow will -- >> looking at the number. >> -- to dividends and some will be applied to -- >> a round about figure? >> somewhere between 300 and $400 million. >> good to see you. we appreciate your time. an exclusive interview. thank you. coming up, more on the talks between vodafone and verizon as the companies dial the operator, hoping to get connected on a deal over verizon wireless. [ kitt ] you know what's impressive?
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only. we wait for a debate later today on british parliament that has been watered down. the headlines today, just joining us, investors cheer confirmation from vodafone that it is in talks to sell the stakes in verizon wireless. president obama insists the syrian government used chemical weapons, but british sent s turned against immediate military action. bank of indonesia raises key lending rate to shore up one of the worst performing currencies in asia. top corporate news today surrounds vodafone and verizon. vodafone confirmed it is in talks with verizon over the possible sale of its 45% stake in verizon wireless. jackie is at the cnbc hq in the states with the very latest. hi, jackie. >> good morning to you, ross. verizon wireless as you mentioned, the leader in the u.s. mobile phone market, has
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become a very valuable asset for vodafone and fortunes waning a bit in europe. the company reportedly in discussions with banks for tens of billions of dollars in financing. it is possible a deal could be reached as soon as next week, but it is unclear whether verizon and vodafone resolved their dispute over price or whether verizon made a specific bid. now, in may, vodafone ceo said he would stake his reputation on selling his stake at the right time and the right price and wouldn't be pressured to do any kind of a deal. in april, reuters reported that verizon had hired advisers for a possible $100 billion bid, split 50/50 between cash and stock. at that time, analysts thought that that was too low and the value of verizon wireless stake was closer to $120 billion. the wall street journal says that a major shift in the financial markets, rising interest rates and also changes in the u.s. wireless business have pushed the two companies a
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little closer together. we're watching shares of verizon in frankfurt up 2.4% at this time. meantime, vodafone shares up more than 30% this year and a lot of that driven by the turn around in the united states. analysts saying that any deal now over $100 billion would represent a good value for vodafone, replacing its nonguaranteed annual dividend stream with up front capital. but a big question would be what vodafone would do with the cash from the deal. options could include boosting its ability to offer bundled services in its core european markets or expanding further in emerging markets or then again paying a special dividend. ross? >> yeah. we'll see. all about price. thanks, jackie. other stories we're look at today, the justice department say that they're open to settling their court fight over the airlines merger. no sign that a deal is imminent. earlier this month, the u.s. government sued to block the deal, which would create the world's biggest airline.
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regulators say the merger would lead to higher airfares and others say it would strengthen the market and make them more competitive. us airways stock is very flat in frankfurt. the probe into jpmorgan's hiring practices in asia expanded. the financial times suggesting the investigation uncovered inl internal documents. jpmorgan is turning over information to the justice department and s.e.c. who is examining whether the company hired family members of influential chinese government officials in an effort to secure business that would violate the u.s. foreign corrupt practices act. jpmorgan is up marginally in frankfurt. still to come, today's u.s. gdp revision could show the economy is in better shape than thought a many ago. we'll preview the data and what it means for policy right after this. [ female announcer ] what if the next big thing, isn't a thing at all?
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this is the pursuit of perfection. european equities firmer today ahead of the u.s. open. we have gains of the ftse around half a percent. third for the xetra dax. u.s. futures after yesterday's gains also pointing higher at the moment. the dow currently some 32 points above fair value. around about slightly lower than we were with the nasdaq about 7 points above fair value. the s&p at the moment is 2.5 points above fair value. what have experts said you should be doing today with concerns about syria, emerging markets and ahead of the second quarter gdp reprint? here is a recap. >> conditions doesn't seem too obvious it is selling and buying
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70 in germany. it is one of those trades that one might want to look at, a hedge periphery bullish position in the event that volatility rises. >> i think iron ore is interesting at the moment. you had a very big run-up in cyclical position of steel in china at a time when there was disruptions in australia. i think at the moment, the most likely thing is that iron ore is heavy in the second half of the year. >> nigeria has done very well for us. on the other hand, saudi and qatar and the gulf markets in general have done pretty well for us. and, you know, i think part of it is the fact they have no currency issue, put it that way, compared to the emerging markets where we have seen currencies like indian rupee collapsing by 30%.
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right. that's some of the thoughts we had on the channel already. meanwhile, reminder of what is on the agenda state side. weekly jobless claims at 8:30 eastern, forecast to drop by 4,000 to 332,000. also the first revision to second quarter gdp. economists expect growth to be revised upwards from 1.7 to 2.2%. and then we got james bullard and jeffrey lacker both speaking today as well. joining us for more, chris rupke. chris, thank you for joining us. once we get the reprint of gdp, will we have a firm idea of what might happen with the fed? >> we're only looking for gdp, 1.7% in the second quarter, this is our second look at the second quarter, if you will. maybe it goes up to 2.2, as high as 2.5. that's probably not going to be
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enough in the fed chairman's view to -- we need faster growth to bring down the unemployment rate more quickly. the fed chairman believes there is something that monetary policy can do to aid this process. he's really looking for a number, you know, well above 3, 3.3% is the forecast for next year. so whatever growth is at 8:30 this morning, it is probably not going to be enough. >> yeah. a bit of a shame. i would really like us to get some, you know, everybody i'm sure would like to know when on earth is going to happen. don't need more provocation, do we? killing me. >> no. we don't. i mean, a lot of uncertainty is holding back the economy. it looks like, you know, potentially because the unemployment rate has fallen so far from a year ago, last september, when they did the first qe for mortgage-backed
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securities, it looks like the labor market, the moves in that where unemployment is coming down, it looks sustainable to everyone in the market except the head of the federal reserve. i'm pretty much sure that they would like to see growth. if you go back to 2004 when they lifted rates the first time, gdp was up at 4%. you see the difference between how we're running now, versus what we were back then. it is still not enough. so qe is very much up in the air whether or not they pull the trigger on the taper in september at that meeting. >> one thing, should they be taking into account the global impact of their decisions or not? clearly, you know, we have seen a lot of routes in emerging markets. previously that had mattered so much, but the rest of the world -- emerging markets account for 30% of global gdp. there is a sense if you ignore your impact, you might shoot
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yourself in the foot. >> yeah, i mean, we always tend here in the u.s. to stay right here focused on the u.s., but i'm always reminded of the famous quote by greenspan, back in 1998 before the global financial market crisis, his view then was that the u.s. cannot remain an oasis of prosperity when things are going not so well. there is stresses around the world. and certainly the fed's low rate policy is encouraged inflows into emerging market nations which are now turning into outflows. we always focus on u.s. exports here. if exports slow here in the u.s., fed officials will be much more worried. at the moment, it is not a big issue what is going on in emerging markets in terms of taper or not taper. >> yeah. chris, always good to speak to you. thanks. have a good day. that's it for ted's show. coming up next, "squawk box." whatever happens, we hope you have a profitable day.
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good morning. today's top stories, global markets settling down with fears of syria and possible military action still looming. in corporate news, andrew, i know your blood pressure is up, your heart is racing, vodafone shares surging on verizon wireless talks. and economic news, a revision to gdp and weekly jobless claims both set to hit the tape before the opening bell rings. we manage to eek out a gain yesterday, but wasn't large. it is thursday, august 29th, 2013. "squawk box" begins right now.
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good morning. welcome to "squawk box" on cnbc. i'm andrew ross sorkin with joe kernen, becky quick will be returning from vacation next week. so you can stop with all those e-mails. we have some headlines for you, and, yes, joe, my heart rate is up this morning. vodafone confirming it is in discussions with verizon about a buyout of the uk company stake in their wireless joint venture. vodafone has a 45% stake in verizon wireless. reports say the u.s. group is looking for more than, i'll repeat this number, two times, $100 billion for the stake. when you talk about big m&a deals, this would be the return if it happens. also, it is a official this morning, bill ackman through with the jcpenney stake. he has sold that entire 18% stake for the retailer. the price tag, only $12.60 a share for it. he had paid almost


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